What to Watch in The Day Ahead; Tuesday, July 29

Reuters Staff

12 Min Read

(The Day Ahead is an email and PDF publication that includes the day’s major stories and events, analyses and other features. To receive The Day Ahead, Eikon users can register at . Thomson One users can register at RT/DAY/US. All times in ET/GMT) American Express’ second-quarter results are expected to beat estimates, helped by lower loan-loss reserves and a rise in consumer spending. The company’s growth depends mostly on its affluent customer-base, people who have been pretty consistent with their spending in spite of the global recession. Core sales increased 0.6 percent in June, the Commerce Department said earlier this month. Pfizer is expected to report its second-quarter earnings and investors are hoping the largest U.S. drugmaker will hint whether it is likely later this year to resume its quest to buy British rival AstraZeneca, or perhaps pursue other drugmakers. They will also be looking for updates on how Pfizer’s experimental drugs, most notably its treatments for cancer, are faring in clinical trials. Pfizer is expected to report flat earnings, excluding special items, and moderately lower revenue as many of its biggest products face competition from newer rivals or cheaper generics. Separately, Merck and Co is expected to post lower second-quarter sales and earnings, hurt by generic competition for its drugs to treat asthma and allergies and moderating sales growth for its Januvia diabetes drug. Investors will be most interested in progress reports on the company’s experimental immuno-oncology and hepatitis C drugs. United Parcel Service is scheduled to deliver second-quarter results. The company should benefit from strong ground shipments and lower costs. Investors will be interested to know the company’s plans to handle the peak shipping season in the October-December quarter, given that UPS was not well-prepared last year and had to spend extra to bring on additional delivery vehicles and manpower to meet the rise in shipments. Federal Open Market Committee is scheduled to begin a two-day meeting on interest rate policy. Standard & Poor’s is expected to release its S&P Case/Shiller Home Price Index for May. (0745/1145) The Conference Board is expected to issue its Consumer Confidence Index for July. (1000/1400) The Federal Reserve Bank of Dallas is scheduled to release its Service Sector Outlook Survey for July. (1030/1430) Redbook Research is expected to release its weekly Johnson Redbook Index. (0855/1255) ICSC weekly chain store sales scheduled for release after declining 0.4 percent the previous week. (0745/1145) Amgen is looking to bounce back from a disappointing first quarter, when sales of several drugs fell short of Wall Street expectations. The world’s largest biotechnology company is expected to report higher second-quarter profit and revenue, but investors will be looking for signs of a stronger second half and insights into drugs in the pipeline that can replace its mature medicines. Deutsche Bank is scheduled to report their second-quarter results. Swiss bank UBS is expected to report second-quarter results. Focus is on how its U.S. brokerage business, formerly known as Painewebber, is faring under Americas head and Merrill Lynch veteran Bob McCann. Honda Motor is expected to announce its first-quarter results with Executive Vice President Tetsuo Iwamura briefing reporters. Separately, TRW is expected to release its second-quarter earnings. Based near Detroit, the company is one of the largest makers of safety systems in automobiles, including air bags, electronics, braking and steering equipment and systems. Investors will look to see if sales growth in China remains strong. TRW, which derives more of its revenue from Europe than any other continent, can also indicate the strength of the slowly recovering European auto market. Analysts expect a rise in British Petroleum’s net income on better upstream performance but the company’s large exposure to Russia through its nearly 20 percent stake in state-run Rosneft will most likely be the main focus as the EU plans tougher sanctions against Moscow. Separately, Anadarko Petroleum is expected to report second-quarter earnings and will update investors on its efforts to expand more-profitable shale drilling in formations including the Wattenberg field in Colorado. Aetna, the third-largest U.S. health insurer and one of the largest players on the Obamacare exchanges, is expected to report earnings for the second quarter. The company, which said it expects to lose money on these new health plans, is expected to talk about how its finances fared in the first quarter that new customers were using these plans. Separately, Genworth Financial is expected to post a higher second-quarter profit on a recovering U.S. housing market and fewer defaults. However, earlier this month, the Federal Housing Finance Agency released a draft regarding new capital requirements for the private mortgage insurance agencies, and has invited comment on it till September. Also scheduled to report its second-quarter results is Express Scripts, the pharmacy benefit manager. Twitter’s decelerating user growth and user engagement on the service will be in the spotlight when the social media company reports its second quarter. Shares in the San Francisco company, which had a blockbuster IPO in 2013, have declined by more than 40 percent in the past six months as Wall Street worries that its service may never evolve into a massive, mainstream phenomenon such Facebook, or newer services like Instagram and WhatsApp. National Oilwell Varco is likely to report a higher second-quarter profit, helped by a high number of orders in its rig technology business, its biggest, which makes equipment ranging from blowout preventers to massive floating production platforms. However, a decline in offshore rig orders is likely to have stemmed the profit rise at the company. Investors will be looking for the company’s forecast for offshore rig demand and its comments on any potential fallout from U.S. sanctions against Russian energy companies. Specialty glass maker Corning, best known for its Gorilla glass used in smartphones and tablets, is expected to report second-quarter results. Investors will focus on outlook on the second half as Samsung Electronics, one of its largest customers, has seen sales drop recently. There are also talks of Apple Inc, a Gorilla glass user, going for rival GT Advanced Technologies’ Sapphire glass for its iPhone 6, expected in September. Ameriprise Financial is scheduled to report second-quarter earnings results after the market close. Analysts expect the Minneapolis, Minnesota-based company to earn $2.01 a share, up from $1.69 a share a year earlier. Separately, Japan’s Nomura is expected to report quarterly results. McGraw Hill Financial, scheduled to release its second-quarter earnings, is expected to benefit from industry trends such as a reduction in the use of intermediaries to invest in the European market, high emerging market debt issuance and a return of structured investment products. International Paper, the largest North American producer of corrugated boxes, is expected to report a jump in second-quarter profit, helped by emerging market sales and slowly recovering U.S. demand. Marriott International is expected to report better-than-expected second-quarter results as global business travel rose. The company is also likely to report higher RevPAR growth across regions. Investors are likely to look for commentary on the impact of the security situation in parts of Africa and the Ukraine-Russia crisis. HCA Holdings, the largest U.S. hospital operator, is expected to report second-quarter earnings. The company last week announced preliminary results that were better than expected and raised its full-year forecast, citing a boost from the health reform law. Investors will be looking for details on the extent to which the Affordable Care Act and the improving economy are driving a rebound in demand for hospital services. Spirit Airlines, a small carrier that charges low fares but adds fees for a host of other services, is expected to report a second-quarter profit of 89 cents a share against 63 cents a year earlier as it added flights. U.S. carriers have posted earnings gains for the seasonally strong second quarter and the two largest airlines announced plans to return cash for shareholders through dividends and buybacks. Newmont Mining is expected to report its financial results for the second quarter. The Denver-based gold and copper miner has suspended its Indonesian operations and filed for international arbitration against the government after a months-long dispute that halted its concentrate exports from the country. Investors will be looking for signs Newmont can solve the dispute as Freeport, the other major U.S. miner with operations in Indonesia, assures its own investors that it expects to restart exports very soon. Caught in the middle of a host of problems such as poor rail transportation and weak prices for steel-making metallurgical coal, Arch Coal is expected to report a wider loss. Separately, rival Consol Energy, looking to become an exploration and production company with a coal subsidiary to shield itself from the effect of dismally low prices, is expected to report a profit, compared with a year-ago loss. Last week, Arch Coal announced idling of a complex in Kentucky and Virginia to shield itself from effect of dismally low prices. Investors will look out for comments on further cuts in coal production and any outlook on recovery of prices and demand. Edwards Lifesciences is likely to report second quarter earnings after the bell. The report comes as the company begins the launch of its second generation transcatheter heart valve, in time to help it remain competitive with larger rival Medtronic Inc. Edwards now shares the U.S. market for minimally invasive heart valves with Medtronic after enjoying a monopoly on the devices for two years. United States Steel is expected to announce its financial results for the second quarter. As massive excess capacity weighs on global steel prices, the company’s Chief Executive Mario Longhi is shaking up the company’s strategy in a bid to improve its fortunes. Investors have been eager for details of his cost saving initiatives. Longhi may offer updates on the company’s plan to replace the aging blast furnace at its Fairfield, Alabama facility with an electric arc furnace or mini-mill, and on the possibility of replacing other blast furnaces with mini-mills. Talisman Energy, one of Canada’s largest independent oil companies, is expected to report higher second quarter earnings. But analysts and investors will be more interested in the Calgary-based company’s talks with Repsol, after Talisman said it had been approached by the Spanish company regarding ‘various transactions’. New York Times is expected to report second-quarter earnings slightly below analysts’ expectations. Though the company reported a rise in print and digital advertising revenue in April after many quarters of declines, Chief Executive Thompson had warned that the overall advertising environment is still uncertain and gains this quarter could be short-lived. Ad revenue expectations have fallen recently despite a global growth. DreamWorks Animation SKG is expected to report second-quarter results below analysts’ average estimate. Three of DreamWorks’ last four movies have had weak box office returns and the company has so far taken charges totaling about $157.5 million. The company had rested hopes on the June release of “How to Train Your Dragon 2”, but the movie received a lukewarm reception at the Box Office. However, analysts expect the movie’s home entertainment and TV segments to do well. (Compiled by Nandi Kaul in Bangalore; Edited by Don Sebastian)